morning. the dow futures down by 117 points. this is day seven of the government shutdown. the pentagon has ordered 300,000 employees back to work. the house voted to pay all government employees retroactively. the bigger issue is next week the u.s. runs out of credit to pay its bills. treasury secretary jack lew making the sunday talk show rounds. >> if we cross the line, we're going to a place that we've never gone. it's very dangerous. >> the argument from house speaker john boehner. >> the nation's credit is at risk because of the administration's refusal to sit down and have a conversation. >> they're saying it's a risk to have a clean debt limit. >> we are not going to pass a

clean debt limit increase. >> under no circumstances? >> i told the president there's no way we're going to pass one. the votes are not in the house and the president is risking default by not having a conversation with us. >> by moody's ceo says the chance of a u.s. default is extremely unlikely. >> that reflects our thinking that it is extremely unlikely that the government treasury is not going to continue to pay on the treasury securities. hopefully it is unlikely that we don't go past october 17th and fail to raise the debt ceiling, but even if that does happen, then we think the u.s. treasury is still going to pay on its treasury securities, prioritize those payments. >> still, the dollar is trading near an eight month low today amid debt default fears. take a look at what's been happening. you can see that the dollar is down against the euro at 1.3572.

the dollar is at 96.96. we'll talk more about that with john harwood. first, andrew has a roundup of the morning's top stories. andrew, welcome back. >> thank you, becky. japan airlines is buying its first ever jets for airbus. the deal is for 31 planes with the value of $9.5 million. joe, i don't own one of those. that's a blow for boeing. the ceo of airbus talking to our colleagues with cnbc asia earlier today. >> not only do we succeed to introduce 50, but it's probably the biggest order ever here in japan. we are very pleased with that. it's the biggest order this year of 50s. 31 aircraft. in other corporate news, becky, we have a little bit of hope this morning. blackberry is reportedly in talks with cisco, sap. you may not have to get rid of it quickly.

they have interest from possible strategic buyers. any deal would be an alternative to the preliminary going private agreement with the shareholder fairfax. jana takes large stake in outer wall. they intend to explore possible options. i didn't know that was the people that ran that. i've tried that. >> really? when have you tried red box? >> you do it when you're on vacation. not very good at working it. like i've tried to return it -- i returned it for the first time this summer. >> did you press return? >> i had to ask somebody for help because i didn't know what i was doing. >> i'm going to get you a netflix subscription. >> if you're on vacation you can't do that at the beach. >> were you getting no e-mails. you can't send out an e-mail saying you're not getting any e-mails.

>> i thought i wasn't receiving them because i thought my mailbox was full. you can still send them out but you can't get them in. i think it was a blackberry shutdown. matt's didn't work. >> you were still in chicago. >> we had a little bit of an incident. >> did you go to rush street? have you heard of rush street? >> i do know of rush street. i did not. >> did you stay friday night in -- >> no. no. no. >> thursday night? >> you came back friday? >> yes. >> are you willing to take a polygraph? >> excuse me. >> you came back thursday. >> right. >> did you go to dinner at scoozy? nothing? >> nothing. zero, zilch. >> i'm wrong. i tagged -- i'm wrong. i ascribed more happeningness to you. >> joe likes to live vicariously. >> i do. you do nothing. >> sorry. >> i can do nothing. i do that.

before we get back to the broader markets. a few analysts calls. ibm to equal weight at barclays. 190 from 215. warren made 10 billion during the crisis. this ibm thing, that's about where he bought it? did you see that? that was a 40% return. >> he ma i had a lot of money. >> when everybody else is afraid. >> he noted, i think he's right actually, that had you bought the s&p when he was making those same -- >> 159 to 185. >> the same place. >> 159 to 185 is where he bought in. 65 million shares. >> you had to have the stomach to do it. >> and the money. >> and the money. >> but the total dollar volume. >> everyone is losing their heads around you you need to keep cool. apple was upgraded to buy from hold at jeffries. the firm says that after talking with suppliers it believes apple's gross margins will be

better than it had expected and the target was increased from 600 to 425. qualcomm was downgraded. the target is 75. even though it was downgraded it was upgraded. they're increasing trereal ogy. let's get a check on the markets this morning because the markets are starting to set up. pay a little attention to what's happening in washington. after shrugging things off after the first week of the shutdown. the dow futures are indicated down by 123 points below fair value. s&p futures are off by 14.5 points and the s&p is down. oil prices down by $1.16. this is probably questions about

what happens to the economy after a week or longer of a government shutdown. some estimates pointing out a half a percentage point and then we'll see beyond that what would happen. this is where you start to get into some kind of messy territory. we're not talking about a quick shutdown at this point. the yield on the ten year note is at 2.63%. dollar is weaker. as we pointed out you can see that it's down across the board. gold prices this morning, right now are up just slightly, by about 2.60. $1,360 an ounce. global markets reports. ross westgate is standing by. overseas we did start to see some minor selloffs in reaction to what's been happening here in the united states. >> yes. >> i see a lot of red arrows. >> yeah, hi, becky. a little bit more twitchy. i wouldn't describe it as

selling. decliners outpaced by subscribers. 8 to 1 at the moment. it's no real heavy selling seeping through. we've seen it down 1% thereabouts on average. ftse is down .8%. it was up four points on friday. we've seen percentage falls for the german and french markets. there we go. we just dipped. ftse down .2%. it was outperforming again today because the coalition government didn't collapse. mr. letta survived and silvio berlusconi has been asked to leave. chemicals, technology down 1.3%. utilities are up this morning. the bias is very much to the down side as well with these

stocks. as far as bond markets, yields are contained. where we were at the end of last year. gilts yields 2.7%. itali italian's a little bit lower. spanish yields slightly higher. we haven't moved the same way. currencies are in the up trends of the year ranges. dollar dax haven't gone any lower. you mentioned a couple of stocks there earlier. one of the standouts was airbus turning the tables on boeing with its first ever big owing in japan. 318350 jet. boeing trying to get a deal with jet. that's where we stand in europe. thank you. ross westgate. thank you very much. we're going to move the conversation to washington where john harwood is hanging out. we have a lot to talk about. we brought the rise above.

i did miss that. >> it's always there. >> john, maybe i'm getting too cynical. i think it's possible we go over the debt ceiling despite everybody thinking we won't. what do you think? >> i doubt it. i think john boehner's more responsible than that. i don't think he'll do that when push comes to shove. >> what's your sense of action over the weekend, zero? >> none. none. the president and the democrats are simply waiting for republicans to move off of a position which john boehner never wanted to be in but he's gotten himself stuck in because of the strategy that he didn't want to pursue but did pursue because he was forced to. now they're waiting for them get off them. >> john, here's the question. joe said it to me before we came on the show. why can't the president pick up the phone? if the president were to pick up the phone? what would happen? that's part of the whole question inside the white house

is if you pick up the phone, what happens on the other side of the phone? >> keep in mind the president, as he told me in our interview last week, has said he will have negotiations with republicans after they reopen the government and raise the debt limit. so he will have negotiations. >> so start just sort of a little bit beforehand. last time remember who it was -- >> it's not start 'em a little bit. >> last time it was biden. biden had to come in and save the day. is that going to happen. being the king, the president can be benevolent. we know he's in charge. he's in charge of everything. >> no, he obviously is not in charge of everything because our economy is at risk of getting blown up. >> he's in charge of the democratic party. not harry reid and becky made this point last week. he could say, john, let's just cool the entire -- let's just cool all of this down and

let's -- what is it that you guys eventually want in these budget deals? >> he knows what they theoretically want. what they theoretically want are entitlement cuts -- >> right. >> -- that they will not propose, that the president would propose without any tax increases which is a possible that the american people oppose who just re-elected the president. what the republicans are saying right now is, mr. president, here's the deal. we want you to -- in return for reopening the government and not causing a debt default, we want you to immediately enter negotiations which we ourselves have not been willing to have all year until right now and in those negotiations. >> hold on a second. >> no. in those negotiations make

immediate concessions up front to a position which is not popular. >> you're going to tell me again that i'm wrong because i don't just tow the line to the democratic position here. >> it's not towing the line. >> there are two sides to this though and i'm just trying to figure out -- >> no. >> okay. there aren't two sides but i wish somehow you could get to a -- >> joe, the republicans -- >> i'm dead wrong. i saw all of news. >> jump to shark. >> i know the republicans are wrong. i'm finding a way to get to -- >> the one thing that changed my mind, i did not realize that john boehner and harry reid had had negotiations and discussions where john boehner said if you pass a bill at the levels we're looking at, 70 billion below what the senate had looked at, that would be enough to get through. that didn't work. the second time around was, look, there's a problem with obama care. i have to have a vote for -- >> joe, are you paying attention

to what becky is saying? boehner acknowledged over the weekend -- >> i'm trying to go somewhere from here. >> okay. >> for whatever reason we're at this point now, i think the president is -- you know, in the past i think he's the guy that's got to do it at this point. >> can we keep our eye on the prize and the debt ceiling issue? you heard what babe ner said yesterday on "meet the press." . >> are there the votes to pass a clean cr? >> yes. yes. >> there are? >> both sides can claim that there aren't. >> you don't know how someone is going to vote -- hold it a second. becky's point is an important one. the speaker acknowledged to george stephanopoulos yesterday that reid has accepted that boehner himself now rejects. this is absolute lunacy. >> i thought it was the president's fault back in 2011. he cut a deal with john boehner and went back to nancy pelosi. the goalposts moved. i think the boehner moved that.

>> john won't concede that. i don't think you can get john to concede anything. that's not true, either, john? >> which? >> that becky said that obama was the one that moved it when he met with pelosi and the democrats on the friday. >> back in 2011. >> and then he came back and wanted another 5 or 600, i don't know, billion in revenue. >> i don't understand -- i'm sorry -- >> john boehner in those negotiations in 2011 never, ever, ever conceded the need for new revenue. he said revenue with dynamic scoring, growth. he never conceded new taxes which was the critical demand. >> we're not getting anywhere, john. you're absolutely as intractable as the democrats. then we're back to square one. then we just -- >> well, i ran into a major republican strategist who's done multiple presidential campaigns for the republicans and his point was, yes, we realize that

we're trapped in an untenable position but obama needs to give us something. >> make the call. >> face saving thing. >> something for our pride. >> it's not going to kill him. >> i don't understand what you get when you make the phone call. >> joe -- >> what. >> -- i don't know if the president is right on this point, but what his point is is that if i just having been pressed with an unreasonable position reward that unreasonable position by giving something, anything, simply to give something, anything, i'm going to make sure that future presidents have to deal with the same kind of ridiculous situation. you know -- >> past presidents have dealt with it, too. >> no. no. no. >> this is a situation -- >> no president has ever dealt with a situation like this. >> okay. >> i think this is not that dissimilar. >> we have never, ever had, ever, a congress that was willing to take it right to the

edge of default. have they dragged their feet? yes. we don't want to raise the debt limit. obama did it. nobody took it up to the brink in 2011. >> the president will still be blamed if that happens. that's what the republicans have i think in the back of their mind, that the guy in charge if the buck does stop there eventually. that should give them some leverage. >> the preds will be hurt. there's no question. >> that's what i mean. >> he will be hurt. >> it's like pet two lent children to see who can hold out longer. >> john, we have to run. what's the day? what day does the actual vote for the debt ceiling get squared away? we have a week? >> i'd say october 16th at 11:55 zblaum wow. >> i want it before then. >> me too. >> i think we go over. i say we go over for a day or two. >> i'll bet you, andrew. >> we'll do it. what's your -- what?

dinner? where do you want to go? >> i'll bet you if i win i'm getting you two tickets to the next bengals home game and you have to go even if it's in december. >> you've got a deal. >> bengals beat -- >> i will come up with our side of what we can offer. >> do you see what the bengals did yesterday? >> that's the key, andrew. you have to go to the game. >> i can be there. >> can i be there? >> they lost. >> they beat the patriots. >> you have no idea. >> i know. >> the bengals won. it was a huge win. they beat the patriots for the first time. >> i'm just showing you because even brady's 52 game record of throwing a touchdown pass was broken. you know who has the record though, i'm sure? >> who does have the record? >> drew brees. the bengals won 13-3 and brady did not throw a touchdown. >> the patriots -- >> well, they don't have any receivers. >> andrew -- >> yes, sir. >> i'm picking a game in mid december. >> mid december. okay.

i'm -- i actually hope i will go to a bengals game. >> you might see some home runs. maybe someone will hit a grand slam. yesterday in the denver/dallas game, you know what i wanted more than anything, john? >> what? >> suddenly the idea of watching a punt and see if they could get it off and see if someone could catch it and like run it. was there ever -- i mean, it was just down the field, down the field, down the field. did they ever stop -- was there ever a three and out? barely, right? it gets old. too much scoring. i want somewhere between 50-50. 99 points were scored in that game. >> joe, i want to go back to one other thing? >> no. come on. i'm trying to -- >> it will be quick. here's what i think will happen. i think that the president may not pick up the phone but, remember, harry reid is involved in this situation, too. he may pick up the phone and i think what is -- what you will get -- what potentially could be

a way out is an agreement on a negotiating process which would take place -- which would be agreed on and the president would acquiesce. >> they're going to go back to where they were 2011. >> super committee. >> you saw reid is now talking about running again. we're not sure whether he's serious because he's got the problem of being a lame duck. he has all of these personal issues right now for being, you know, so intractable. i'm going to laugh if the biden meister, if he comes in and saves the day again, i'm going to laugh, if he comes riding in there. >> i think it's going to be the gang of 8. >> the gang of 8? >> i look forward to the bengals game. coming up, why americans are hoarding more cash, plus how a 9-year-old managed to make it past airport security, get to this, to fly to las vegas alone without a ticket. first as we head to a break let's check on the national forecast. the weather channel's alex wallace.

>> good morning to you, guys. a wet morning. wet start to things. parts of the carolinas getting into virginia. downpours heading into roanoke. showers entering the interior northeast. all thanks to a cold front that will march its way in and help bring us rain for the i-95 corridor. we'll see storms fire up particularly later today. thunderstorm activity and some of those storms could pack a bit of a punch. areas shaded in red from east to north carolina has the risk of damaging winds and hail. the main risks but you can't completely rule out isolated tornadoes. active weather. keep the rest of the weather situation across the northeast. that's your national weather forecast. more "squawk box" coming up next. so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...

and tomorrow. so let's see what we can do about that... remodel. motorcycle. [ female announcer ] some questions take more than a bank. they take a banker. make a my financial priorities appointment today. because when people talk, great things happen. make a my financial priorities appointment today. pcentury link provides reliable yit services like multi-layered security solution to keep your information safe & secure. century link. your link with what's next.

welcome back, everybody. right now it's time for the executive edge. this is our segment on giving business leaders a leg up. twitter quickly becoming a part of lots of industries. today nielsen sl introducing twitter tv ratings. this was announced last year. the goal is to measure the activity and reach of twitter conversations about shows. ahead of its ipo they have forged partnerships with television content owners like cbs, mtv and the nfl. twitter's amplify program will let them send video feeds to

people interested in their programming. does it tell you who's watching? >> to me the only thing it does is suggest maybe how engaged certain viewers are. that's about it. half the time, by the way, can you send out a tweet, even you, becky, and i won't see it unless i go back to scroll. >> if you're watching the at moment it gets sent. >> directionally it may suggest an engagement factor but i don't think it suggests a tweet thing. >> we've measured twitter stuff about shows we have on. it doesn't seem to correlate. >> the ratings, you mean? >> it's such a blunt instrument. you're reverse engineering. i have an idea. nielsen, i think, is a blunt instrument right now for ratings. >> right. >> no out of home measurement. >> fix that. >> no. if you want to know what people are watching, ask comcast. if google knows every predilection i have for the slightest thing, and if the nsa

knows exactly, why can't you ask -- why can't from a set top box, how about saying what people are watching? >> and its privacy concerns. >> that's a privacy issue right now. my question is if comcast or time warner cable, verizon, whomever -- >> ask them what -- >> you have to check a box. is it okay if we -- maybe they'll offer you 3 bucks or 5 bucks a minute. >> you know down to the minute. >> to go backwards from twitter. >> for a discount, a monthly discount. >> the privacy concerns were a really big thing brought up in the past. we seem to be giving everything -- >> you saw the numbers. >> on google, on your phones. >> 230,000 tweets and you're talking about trying to measure 5, 6, 8 million viewers. how do you extrapolate. >> what would you want back in return for your priecvacy? >> you see what i'm watching. >> check the box. >> that's what we should do. that's the end of it. >> problem solved. guys, let's talk about the next story.

a 9-year-old boy made it past tsa officials and airline gate official alzheimer's to board a flight alone to make it from minneapolis. he was screened at security. security camera tapes showed the child then managed to board a delta flight undetected. >> welcome to security theater. that's basically all it is. >> i want to know this kid. did he want to go to vegas? nine, yeah, i'm going to vegas. sneaks on a plane. i want to invest in this guy. >> enterprising child. >> he did a dry run the day before. >> why vegas? >> sounded like an exciting place. >> go where the money is. at nine years old? >> you don't want to fly to iowa city. >> i bet he had a harder time playing at the black jack tables. >> didn't quite make it there. he said his parents were in the back of the plane. one of the flight attendants got suspicious and noticed his name was not on the manifest.

>> an internet entrepreneur. >> we'll have him as a guest as a disrupter. let's talk about disruptions. families are still hunkered down hoarding cash. an analysis of households in the world's ten biggest economies show that families continue to spend very cautiously. they've pulled hundreds of billions of dollars out of stocks. for the first time a big drop since post world war ii. they've poured money into savings and bonds that offers tiny interest payments. >> yeah. >> deleveraging. we talk about it all the time. we seman any if he is stations about it in the stock market. that's the hangover from the financial crisis. it only means things can be better, right? we're a long way from the speculation.

do you know who has the speculation? >> who. >> the fed. the fed are fully engaged. deep into 2014 they're saying that for tapering. >> yeah. >> they're prichbting a new $100 bill. >> if you're talking about cutting 1/2% off gdp growth every day of the week. this is day seven. >> call me. >> call me. when we come back, john paulsen's bet on greece, but first a new dance world record. the most massive dance took place in croatia. to join guinness records the organization needed 250 dancers, 274 participated. ♪ ♪ ♪ we can dance if we want to ♪ we can leave your friends behind because if friends don't dance and if they don't dance, well, they're no friends of mine ♪

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kerner along with becky quick and andrew sorkin. s&p was down. it was the second down week in a row. it wasn't anything out of the ordinary. we'll see this week, this would put us below 15,000 again on the

open most likely. now that we have taper or qe forever, deep into 2014, if anything positive happens looking like this will get done before the 17th, i think people would just, you know, can't we all just get along? let's talk. can't we just talk, andrew? >> we do it every morning. >> come on over. come on over to the white house. let's talk. doesn't boehner smoke? maybe the president can bum a cigarette. >> he doesn't smoke anymore. >> they can use nicotine patches together. we have a couple headlines to get you through. fair home capitol is opening up its nine month old hedge fund to institutional investors. the fund was launched in january. it's grown to $140 million largely through investments by berkowitz and his employees. he hopes the fund grows to $1 billion in assets.

the financial times hoping that john paulson invest into greece's struggling banking sector. expecting it to turn a corner it's said to have prompted big banks to lobby the government to consider speeding up the reprivatization of the sector. joe? >> joining,, beth ann bovino and from chicago, low greene, drw trading strategist. lou, what happened to the dollar? i think it's a combination of a possible debt default. i don't believe that. i think it's now that qe has pushed -- we're going well into 2014. i think that's what's hrting the dollar. there's going to be no taper. >> i think the dollar -- probably the response is more i think tied to the debt ceiling. there's so much uncertainty that's happening. then you can't tie the fact that, well, with the debt ceiling, with the bickering among politicians in dc, when

are we going to see any kind of compromise on the shutdown. that means the tapering will go through into the 2013. >> you mean qe will go through? >> lou, what do you think? >> well, i think it's similar to that. the idea of the qe going through 2014 i think, you know, at some point it was going to go in through 2014. maybe not at 85 billion, 70, 75 gradually diminishing. >> a couple more years. >> don't start until the end of the year. i don't think you can see a lot of difference between the value of the dollar now, the yen or the euro in particular, where the dollar was at the beginning of this episode versus the emerging markets. >> where are the spreads then on -- you see it in the debt market too, then, wouldn't you? are you seeing anything that indicates that people are taking a default risk seriously, lou? >> where that will show up is in the stock market. it's one of those deals just like in 2011. in 2011 the market was just a

couple of percent from the high even though we've been talking for -- about the debt ceiling and the possibility of default for months. it's just such a remote possibility. it's such a stupid thing. even so , the treasury can finda way to pay everything as they go along. the closer you get to it. then it's snowballing itself. if you haven't done anything going into it, all of a sudden there is a calamity of some kind, then you're kind of an idiot. it's so unlikely how do you hedge the apocalypse. when you get to the edge you have to do something. >> what is your bet with harwood? >> bengals. >> bengals. your bet is -- >> debt ceiling. we go over. >> we go over. you're not saying we default on any debt? >> not necessarily. >> but you think there's a possibility that we default on debt? >> well, i think there's 4 million payments that get made literally every day. the chances that you actually

default on one or two payments if you go over if you believe the treasury is right, but i do believe we go over. only on treasuries? >> no, across the board. >> in 59 seconds we will be into the next day. >> okay. >> my sense is even on that day the market will go down but everybody believes -- see, here's my issue. my issue is everybody believes that everybody in washington is so rational even though they're not. as a result the market pressure -- >> the republicans you mean? >> no. no. both sides. both sides. everybody believe they're rational enough not to get it together they ultimately will. it's what warren buffet said on thursday. >> see, i don't feel like going to washington on the 17th. >> right. yes. we were talking about doing the show on the 17th. >> that's why i'm asking people

to talk. please. >> i would say on the 17th, whether the debt ceiling happens or not, i would say that's likely going to happen. we have the shutdown and that saves the treasury money. >> the department of defense is bringing back over 300,000 employees that they say they can very well bring back all of the civilian employees. >> maybe the 18th. >> what is, beth ann, the actual impact on the economy from the government shutdown. is it half a percentage each week? >> i'm looking at a little less, 30 bases points. the first week probably didn't have much of an impact. you're looking at people that had planned to visit d.c. to go to the monuments. they couldn't go. everything is closed. but the longer it goes, the more it's going to hurt. if you're saying something closer to the '95, '96 shutdown, a little less than a month, you're looking at 1.2% growth taking off of the fourth quarter. that's pretty significant. where do you see that?

well, irs. no tax refunds go out to the people who need it. all those people on furlough, well, they're not getting checks and eventually that will hit their spending. for some people, they might not be able to pay bills. you have loans not available. finally for economists like me and the fed, you don't have any data to analyze what's going on in the world. >> lou, just listening to that, i would -- 2014 is going to be tough to switch around anyway because of the redistricting. that's going to be hard. the president's going to see that this is going to hurt the economy most likely. eventually that's going to be his legacy. it seems like it's in his best interests to -- we already are sure, the country -- we're absolutely sure this is the republican's fault. i think you could look magnanimous to say, all right, you little spoiled children, i'm

going to rise above, you know, what you're doing and, you know, instead of just taking the ball and going home. i'm going to actually try to do something. wouldn't you do that if it was in your best interests? >> i think it's in the best interests of everyone in washington. >> don't you know how people think in chicago. do you know them? can you talk to them? >> i'll see what i can do. i'll give him a call. maybe i'll see him at the diner. that's the whole point. it's obviously in everyone's best interests to solve the government shutdown and make sure there's no perception that the government will default on its debt. it's such an irrational thing that it should go that far to do it. that's why i think the market hangs around with the negative bias until you sort of have to say, i have to hedge a little bit. that kind of snow balls. remember, back in 2011 even though we got this all solved, the s&p was down 18% in two weeks. >> maybe i should start, you know, getting on the biden thing. keep talking about -- get joe

involved. >> there you go. >> leno said since all nonessential employees are furloughed, he may not be -- >> might show up. >> might show up for free. >> see, i think he is essential. i think he's the opposite of nonessential. >> there are a million workers asked to work without pay so maybe he's one of them. >> could be. >> come on, joe. might be you. might be you. the president or the vice president. >> lou, thank you. up next, we are going to talk about initial public threat. how the government shutdown could disrupt the ipo market. at the top of the market we'll welcome alan kruger in his first television interview since leaving the administration. the futures at this point are under pressure. this morning dow futures down by 125 points. s&p futures off by almost 15 points. "squawk box" will be right back.

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welcome back, everyone. amid the shutdown and default fears u.s. equity futures have been selling off. the dow futures are down below 125 points below value. in our headlines the supreme court begins the fall session. despite the government shutdown. the court announced that it will operate normally, at least through the end of this week. there are more than two dozen cases on the fall docket including the equal protection clause, age discrimination and campaign finance. >> the government shutdown now a week old with not much progress on capitol hill. if the shutdown drags on, big question, could it start to impact the ipo market. joining us to discuss this and a lot more, michael furdick.

he's the ceo of reputation.com. this was an angle i had not thought of, michael. given where we are now, i assume the s.e.c., they're not really working or are they working? >> the s.e.c. is working. they have a couple more weeks of funding. the federal shutdown will have a big impact on the ipo game. bankers who are very connected to the issue. it looks like november ipos will not be affected but december could. >> twitter is in okay shape? >> twitter is fine. the pipeline is full. it's fat and full. we have had 150 ipos year to date. we're on record to have a dominant year. if you want a very, very, very powerful lever to screw up the wealth creation of the economy, defunding the s.e.c. is a good one. >> they're still funded? yes. >> they're running out of cash

now. the word i have is they're running out of cash in the next 10 or 15 days. >> if you were to try to register for an ipo? >> we do not know. they have not made clear what their alternative plans are to the people i'm talk to go. >> i want to get to one other issue with you since is important, you are reputation.com. you help people build reputations on time. >> yes. >> the state ag two weeks ago in new york -- >> yes, this is important. >> went after 19 different companies for trying to change -- >> embellishing. >> trying to change their reputation on line. writing fake reviews. >> fake reviews. >> to up the ante of their restaurant. look better. i thought if i hired a reputation.com or if i tried to make myself look better online. that was okay. >> it is okay but it's not okay to write fake reviews. i'm glad you're asking about this. i've been public. you can't ask for fake reviews and you can't create fake reviews. you can't hire someone to get fake reviews.

my company, reputation.com, only invites your customers to give you real reviews. >> if i called you and said, look, there's this horrible thing out there on the internet about me. >> yeah. >> there are some unfortunately. >> yes. >> i said i need you to -- >> completely undeserved in your case. >> thank you. i said, you need to help me fix this. >> yes. i would say yes. >> i assume you might build some nice glowing profiles of me and some other things? >> you don't have to do all the embellishment. you don't have to do all of that fansy pants stuff. tell the truth and make sure you know how to tell the truth on the internet so it shows up nice and high. >> how do you do that? >> first of all, a lot of observation how search engines -- >> i thought they did it on the most clicked on things. >> that would have been true a solid 15 years ago. it's no longer true. there's a lot of input. i often get this question from famous people. one blogger has a bone in his dr craw how do i solve that? >> new york ag did crack down on

fake review peddlers. that's healthy. >> restaurant guys will say the guys who are writing nasty reviews about me are my competitors. >> often that is true. whether it's true or not, you can't ask all your waiters to write a good one for you. the big problem is not for restaurants? restaurants, night life, hogs pi talt, you get a lot of reviews. reviews. it's for almost every other kind of company in the country. so there's outsized impact. >> we've got to run. one more question. >> one more. >> when you press like or not like, sometimes you can move these things up or down. >> yeah. >> if i said to you move up or down these reviews, would that be considered illegal by the a.g.? >> i don't know. >> would you do it? >> no, i don't think that's something we'd get ask to do. there are people who ask you to create fake reviews, but we won't. >> thank you for this on the issues of the ipos and managing your reputation online. >> thank you. a call to rise above. a former council of economics adviser chairman alan krueger says not raising the debt

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opening with $55.6 million in north america and ticket sales. and sony's "cloudy with a chance of meatballs ii" dropped to second place with -- >> did you tell us? >> i liked it. my son loved it. yeah, he did. >> i want a review. >> the scariest thing is -- and astronauts have conceded this. you know, if you get separated and you start going that way and there's no one there to come out and retrieve you, you keep going and going. you can't swim back. >> just go to the theater? >> yeah. what's really neat, if one thing happens, it's neat to see all of the action -- >> cause and effect. >> the way that if you're going -- you know, i'll give away parts of the movie. >> don't tell me. >> don't do it. >> you are going to see it. it's entertaining. >> yeah. it's entertaining. >> okay. >> and worth the studio experience? because i've read that you

should -- >> we saw it in 3d. and it is beautiful. looking at -- because the earth is in the background. the one thing that was a little weird was there's other space stations around and they're like, you know how big space is, think about how big kansas is. >> yeah, you might run into another one. >> well, let's go over to the russian space, it's right over here. >> spoiler, spoiler. >> but everything's like a football field away. >> when we come back. the government shutdown heads into a second week, no end in sight, and global markets are starting to take notice. europe opening in the red and the dow futures at this point more than 120 points below fair value. we'll have this continuing story when "squawk box" comes right back. capital to make it happen? without the thinking that makes it real?

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could the unthinkable really happen? alan krueger, comparing the debt ceiling debacle to sharknado. his first television interview since leaving the white house is just ahead. shining the spotlight on sector transports. find out if it's time to pump the brakes of put your foot on the gas from planes to trains to trucks. the names you should be watching. >> be sure and tell them large marge sent ya. >> will a deal get done in washington? >> i told my members the other day, there may be a back room somewhere, but there's nobody in it. >> top lawmakers and

administration officials hit the air waves this weekend. >> there are no winners here. every day the government is shut down, it does real harm to the american people. >> a wrap-up of what you need to know as we try to rise above washington politics, the second hour of "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" on cnbc. the futures this morning sinking as the government shutdown enters its seventh day. dow futures down by 125 points. in our headlines this morning, in agreement in sight to end the government shutdown nor to raise the debt limit with a deadline that is rapidly approaching. house republicans say they are eager to negotiate with president obama. >> the nation's credit is at risk because of the

administration's refusal to sit down and have a conversation. >> they're saying it's a risk because of your refusal to pass a clean debt limit. >> we are not going to pass a clean debt limit increase. i told the president, there's no way we're going to pass when the votes are not in the house to pass a clean debt limit and the president is risking default by not having the conversation with us. >> a big blow for boeing, buys 31 airbus a-350 jets. they will replace 747s being retired from the carrier's fleet. and walmart and radioshack are cutting prices for apple's new iphone 5c to less than $50. they had previously discounted the less expensive of the two offerings. walmart's promotion lasts through friday and radioshack's will end on november 2nd. >> reading that. is that true? >> i do believe that's true.

>> i'm going to go back and find it. >> the debt ceiling? right. >> hello. >> switched over to. >> hello. they switched over to budget. they're talking budget now. >> there may have been some blowback from -- >> there's still. one, they want this, two, they want this, and three -- ted cruz, but i don't -- >> that's why i said we might go over. >> you said we will go over. >> we will go over. >> we had the european debt crisis. we had some other predictions. this is going to be another. >> sorkin predictions. >> i think something starts happening today. i don't think they're going to like the market today. >> i hope you're right. and by the way, i want to be wrong. >> no, you don't. >> i do. it would be better for the country if i was wrong. >> some men like to watch the world burn. did you see batman? >> batman. did years ago, yes. >> from the sniping tweets to

the war of words on the sunday talk show, the gridlock in washington isn't showing any signs of breaking. joining us now, alan krueger. and proor of economics and public affairs at princeton university. >> you want to apply? >> i know some people that some day -- i'm trying to find an ivy league school with fair and balanced education. is princeton the one? >> there's no better school in the world than princeton university. >> when is the first break? 7:20. this is your first television interview since leaving. >> that's right. >> yeah. in person, you're no worse for wear from working in the white house. maybe because you refreshed yourself after leaving two months ago. it's a grind, isn't it? >> i have the glow that the president said that, you know, the alumni have who worked in

the white house. >> because they're no longer there. no long, oh, god, why did i say yes? >> also head of equity portfolio strategy. i still think it's in everyone's best interest to let the other side off the hook to some extent if they can. sooner or later that's going to happen. and this reminds me of wrestling, almost. and it reminds me of the wrestling that, you know, where we know it's not real sometimes. are you expecting us to go up to the 17th? >> i think it's going up to the wire. that's what we've seen in the past. i think it's unfortunate that we're here. i think the reason we're here because speaker boehner went to plan "b" in december. walked away, that put us on this path and, i think as, you know, the administration said, they're not averse to reaching a grand bargain. they shouldn't have the

negotiations under the threat of default. >> if everybody, it's a lose/lose if the economy ends up weaker. it wasn't great anyway. we already saw little slowdown at 150 or 160. so why at this point, you know, i don't see any electioneering going on. he's not going to lose anything if he makes that call and lets these guys, you know, not completely lose face. >> yeah, the president, i think has done a lot of difficult things. offered a lot of things that are difficult for democratic president to do in terms of entitlement reform. >> he's offered it. >> he's offered it. still up on the website. if you go take a look. >> why not call up and say, look, this is what -- this is still on the table if we do this deal, if you give me, you know, the increase, we'll talk about immediately.

we'll talk about cpl, entitlement reform. why not make that call to make sure there's the possibility of progress. >> he has been having discussions with various groups reaching out. but no country should operate under the threat of default where you're facing extortion from one fraction of the party. >> that's the way the system is set up. it's possible to do that. >> it hasn't been played that way in the past. it's irresponsible. >> to lesser degrees. >> nothing to this extreme. >> okay. but people, you know, they do what they're going to do. what were the markets like? i'm arguing for the market side. >> yeah. i don't think that the trigger to the deal will be the markets this go around. yes, we're weak this morning. but our broad position on this is the situation is significantly different than 2011 and as much as when you looked at the fact that european

credit markets were under an extreme amount of pressure. and the u.s. budget deficit was as big as greece's. and you thought if the country at the core of the global financial system can get drawn into this, it's a scary pop sigs. we're nothing like that right now. we'll have a 3.9% budget deficit. this year we're on our way to two. so the thing that will push, i think, the parties over the edge are the polls. and a recognition like in '95 and '96 that no one is winning this. clinton went down ten points, president obama's approval has been going down sharply. and that'll push him to the table and they'll wind up -- >> the republicans can't get any worse in terms of the polls, i don't think. that's why i think this is eventually going to have to be the president's move. last week they said, we don't mind the government shutdown because we're winning. that was one of the quotes. what does that mean either? winning? >> that's right.

you can poll various polls. in '95 and '96, the republicans had taken the house for the first time since 1948, lost two seats and picked up three in the senate. while the general narrative is that they lost the '95/'96 fight, they didn't really lose it. >> tell me what happens in the market for real if it goes over even a day. warren buffett made this comment on thursday's program that suggested that ultimately we'll get to the right resolution but we might go over a day or two and seemed more sanguine i would have imagined about it. >> here's another related point. unlike the budget control act which had a significant negative impact on the economy. unlike the atra, i can't call it by its name because it raised taxes even though it's called taxpayer relief. the deal we're likely to get out of this will not contain 150 basis points of fiscal drag and the market's been accustomed of

going to the wire and getting a deal. i think you'd absolutely -- >> is that as a result, though, is there going to be a perverse nonincentive for washington to act because the markets are going to sit here? eventually they'll get rational about it. we're not going to freak out completely. there's always going to be a buyer on the other side waiting. you're not going to have that pressure point where they're going to go, we have to do this right this second. >> expecting the s&p to go down something more than 5%, for example, is a bad bet. it's unlikely. again, i think the trigger to get them to come to the table is the recognition that nobody's winning. if nobody's winning, if the polls are going south, looks like no clear victor, that's the seeds of compromise. not because the market imploeds. just don't think that the markets are going to do that this time. >> if you look at the government shutdown, we've been trying to

figure out how big of an impact is on the economy. what happens if we extend to the 17th? >> well the shutdown is harming the economy. it's not tragedy for the economy, but not something the economy needs at this point, certainly. the best estimates are that each week shaves gdp growth by .2 percentage point. >> we've seen estimates as high as .5%. >> well, .3% last week, that's ridiculous. >> .2 is a reasonable estimate if you look at the past shutdown. the one that went three weeks. if they're not paid retroactively, it's a lot more than .2% per week. the pentagon is going to bring back more workers, that's moderate it a bit. but the longer this goes on, the worst it is for the economy and, of course, the uncertainty created by the wrangling over the debt ceiling is a much bigger issue, i think for the -- >> is this the type of thing -- we keep waiting for the u.s.

economy to really break out and hit new growth levels. does this derail that? >> slows it down, pushes it back, there's no question. that's what we saw in 2011 with the fight over the debt ceiling. i think it pushes back the point from 2% growth to 3% growth. >> you know the president well. what would force him to pick up the phone? >> i've just been watching the president's statements very closely. he views this as extortion and i think it is extortion. this is just a six-week cr. if he were to give into their demands, to their blackmail, i think at this point, again, in six weeks and i think he's thinking more importantly about future presidents. he doesn't want to leave his successors in the position to be blackmailed. >> you have to -- if you're going to compromise -- and i'm listening to the statements too, obviously i don't know the man but he said in that -- on that first day, the sequester's still

hurting. okay. there's something the democrats want, the president wants. the democratic budget was $70 billion above the budget. give on that a little bit. we know the long-term debt problem is entitlements not the near term discretion spending anyway. and give republicans something on the other side and get a deal. wrap it up for a year and move on. >> do that this week. >> well, i always thought it would take a week, at least, joe, until we got evidence in the polls things weren't going that way and they would start to move. tuesday, wednesday. >> all right. >> what i think is missing is the internal dynamic within the house republicans because they seem to be quite fractured. -- it's awfully hard to decipher the strategy. joe couldn't figure out exactly -- >> people said boehner -- if he wanted to, he could do it now. if there was a way where he could save face a little bit, he's got the votes probably for a clean -- they're saying -- he's saying he doesn't. >> well, he knows the dynamic

within the party better than anyone. >> right. >> the fact he hasn't put up the clean cr, he must be worried -- >> well, might be worried about the speakership too. anyway, they'll be with us for the rest of the show. we've got andy card and john podesta. we're coming right back in a moment. this week, "squawk box" is rising above the debt. equity group investment's chairman sam zell is our guest host. on wednesday, bp capital founder boone pickens talks energy. and on friday, we wrap up the week with former ge chairman and ceo jack welsh. the biggest names in business are here. and it's only on "squawk box."

let's check the futures, show you where the market's indicated to open down. about 124 points on the dow to open where it is here. last week, union pacific warning that profits would fall below examination. right now, we'll shine a sector spotlight on the transports as we head towards earnings season. christian, is union pacific the exception here? >> well, i think what we saw at

union pacific was a little bit of a change of mix of traffic in declining coal and grain which are high-revenue, high-margin businesses for them. i think the rest of the businesses were doing okay. the preannouncement was negative, but only missed by about 3%. >> you've seen volume up over every part of this sector. >> that's right. if you look over the third quarter, it was somewhat constructive. july up about 80 basis points, and it accelerated to about 2.5% growth in august. and then september was the strongest of the three months it was a better trend through the quarter. >> we look at the transports as some indicator of where the economy's headed. overall you would say the economy was doing well, at least, based on what we've seen up until this point? >> sure, seems like we're getting a little bit better. september was sort of weak last year, but the pace of the economy seemed as good as it's been over the last six or nine

months. >> this government shutdown, will that have impact in the transports in the immediate future? >> i think for the most part, businesses continuing to operate in the freight segment of the economy. we don't see a huge impact coming up in the next couple of weeks or so. around the ports, you could have issues with customs, otherwise, but for the time being, i think we're okay. >> this is beyond, this is the trucks, the railroads, shipping, on every part of the sector? >> i think if you look around the pace of volume flows for the third quarter have been generally with everyone getting a little bit better throughout the quarter. >> your two favorite picks are union pacific despite the earnings warning and fedex? >> yeah, union pacific continues to be our favorite pick in the railroad space. still exists there and we're getting double digit earnings

growth. fedex is interesting because one of the few transport names not at an all-time stock price high, you have fairly depressed margins in the express segment and a self help story underway if you get a little bit of tail wind from the economy helping out. >> trucking company, ch robinson, you are a little concerned there? >> yeah, so ch robinson is unique. a bit of a truck brokerage company. they work a margin between the sellers of capacity and the buyers of capacity we think the truck market has gotten tighter because of issues that went into place on july 1st. it's a very kpestive market right now, may see margin pressure in the third quarter. >> okay. >> well, this volume dynamic to me is really interesting because core retail sales were fairly soft. that correlates with holiday sales. there's lots of concerns about that. but if you look at things like asian exports. china in particular, exports to the u.s. averaged 1.8% analyzed

in the first half. but the last two months, they've averaged 5 1/2. looks like this activity's starting to pick up. what you describe sounds like, yeah, there is actually this pick-up in volume that implies, you know, maybe final demand is not as bad as you would think. at some point here, the effects of the tax hikes start to dissipate and you would expect consumer demand to start to lift a bit. sort of wondering if we're looking at the leading edge of that in some of the activity numbers or it's an inventory restock. >> well, i think it's a little bit of both. we've been running at extraordinarily low inventories for an extended period of time in the u.s. we've been really running at very kind of depressed levels from an inventory perspective because i think of a weak outlook in general by customers. and we should start to see -- so if we see any end market demand, which i think is what we're starting to see on the margins, you're going to get that pick-up in freight volumes and agree with your point about the china exports. we watch some of the container trade data, and that has been getting better.

we have, you know, typical seasonality would suggest you do a little bit more volume in late third and fourth quarters going into the holiday season. but on a year-over-year basis, things are looking good. i would agree with your point. >> thanks a lot for coming in today. >> thanks for having me. coming up, what you need to know for the week ahead and day seven for the government shutdown. they're both waiting for the other side to yield in a showdown that's supposed to be about spending. but derailed by disagreements over obama care. two former white house chiefs of staff are going to join us. they'll be right here, "squawk box" coming right back. time now for today's aflac trivia question. when did the word millionaire first appear in literature? the answer when cnbc's "squawk box" continues. ready to run your lines? okay, who helps you focus on your recovery? yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt?

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>> aflac. >> again, the futures this morning if you're just waking up are under pressure. dow futures down by about 125 points as we head into day seven of the government shutdown. in the meantime, the average price for a gallon of gasoline in the united states continues to fall according to the latest lundberg survey. just over $3.38 a gallon. that's down about 45 cents from a year ago and down nearly 14 cents over the last two week. that is the biggest two-week drop since last november. and if you look at oil prices this morning, you'd see another drop. oil trading around $102 this morning. coming up next, a check on gold and the dollar this morning as we get ready for another week of trading and then we'll be welcoming john podesta. "squawk box" coming right back. so i c

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welcome back to "squawk box" this morning. even as the government shutdown continues, the pentagon recalling most of the 350,000

civilian workers who had been sent home according to chuck hagel. the newly signed bill to pay the military will also allow most furloughed workers to also return. also, apple's tax practices now they've received a clean bill of health from the sec. all things reporting that a four-month review found nothing wrong with the way apple handles the overseas cash and tax policies. and you'll recall mr. tim cook went to washington to talk about that a couple of months ago. blackberry may be selling pieces of itself. pieces, let's put a point on that. reiters reporting that the company has been in talk with cisco, google and s.a.p. about selling various units. so i don't know what happens, becky, actually, the more i think about it. >> i'm curious of what it means for blackberry. >> i know alan's got one too. we shall see. the debt drama continues to

weigh on both gold and the dollar. joining us right now to talk about talk about currencies is the global head of currency strategy. frank holmes is the ceo of u.s. global investors. and mark, the dollar today in particular has been quite a bit weaker on this. joe asked the question earlier because qe is going to be extended into late 2014. >> i don't know how far qe will be extended. i think the dollar is mixed today. we've seen it trade euro, sterling, dollar strong against the dollar block currencies. people reduce their short dollar exposures hoping, anticipating something would happen over the weekend. >> nothing happened over the weekend. >> and the dollar has resumed, has traded heavily again against the major currency. some kind of safe haven bid for the japanese yen and swiss

franc. i think from the sentiment point of view, rather, most people, i think, i'm not thinking the u.s. government will default when push comes to shove. how the politicians get out of this one not clear yet. >> if we head to the brink, october 17th, which is the date treasury has laid out as the point of no return, then what happens to the dollar? what's a fair price versus the euro let's say? if we're sitting on october 17th with no deal? >> well, i think in general, the dollar -- the euro heads up higher, maybe as high as 137, we stopped last week at 1.365. i think people don't want to be caught too short the dollar when this news hits. i think it'll be very cautious trading. but, again, i think the important thing is many people are looking past this. many people do not think the u.s. will default. >> okay. if you get past default and still looking at qe, let's say qe does push late into 2014 before there's a taper, then what? is there a point where the

market starts to push back? >> well, i'm not so sure the qe has been a key driver to the dollar. weaker through the summer as european economic news improved. and that's the focus. talking about hedge funds buying greek banks. we've seen other reports about leveraged players buying distressed debt in europe, u.s. money markets increasing holdings of european paper. i think there has been a move into europe which is keeping the euro well supported. >> frank, gold prices have risen as we've gotten into this kind of mess that we're sitting in right now with washington. what happens if there is a resolution in the deal and the whole world looks brighter? what happens to gold prices at that point? >> short-term, we are in a bias sentiment going over 35 years of data. so i think it's important to follow what's taking place in asia because the biggest physical demand for gold you see

in the shanghai commodity exchange is deliveries are taking place there. month in and month out. and i think even in india, india's demand for gold, even with all the barriers to entry are rising with government policies, still very strong. >> although, frank, we were looking at a longer term chart watching gold go from 1,800 to $1,300. is this a bear market for gold overall if you look at it? >> well, it clearly appears to be that. but if you go back in the 70s, the corrections were of similar magnitude. i think what's important is that the monetary stimulus is going to continue, qe-3, qe-4 will continue. short-term what gold is saying there's a deflation. and gold is usually -- whenever there's type of physical factors in the marketplace is deflationary and governments will do everything to stimulate economic activity. but coming back, it's so important for investors to buy

gold, 5% to 10% waiting ask rebalance. don't run out there and buy it to make a big score. >> 10% seems high, 5%, that i can get my head around, but 10% seems a bit high, frank, no? >> no. 5% gold stocks, we've shown for the past three years, five years, ten years, outperforms the s&p 500. >> okay. mark, frank, gentlemen, thank you both for joining us this morning. coming up next, getting negotiations started. what will it take? maybe our buttons. >> i say -- >> thank you, andrew. thank you for listening. >> former white house chiefs of staff john podesta. as we head to break. here's treasury secretary jack lew on meet the press yesterday. >> i know the leaders of

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let's check the futures, we've done about 125, now we're down 117. as we wait. we wait for the thaw. waiting for the thaw. one of these days, i think. >> i can't believe nothing happened over the weekend. >> i was looking through one of the papers. maybe it was the washington post that had losers and not so losers. and, you know, there's no winners. reid was in that not that big of a loser and couple of other not that big and then the big losers were the -- >> it's more about who is going to be the loser in 2014 and 2016. >> it's hard to -- the senate may be interesting, but the house, you got these guys coming from places where it's like 90% of either party is who's voting after redistricting. >> well, we have a with a view on all of this. "squawk box" is trying to rise above the debt ceiling looking for ways to solve the gridlock

in washington, joining us right now is john podesta. former white house chief of staff to president bill clinton. in studio, alan krueger, former chairman of president obama's council of economic advisers also professor of economics and public affairs. princeton university. i'm going to go to you, john, because we heard from the other guys so far. we're not going to try to what is the olive branch that needs to be extended. >> is there something me can say? >> well, andrew, i think that he's already indicated that he's willing to negotiate over the budget, but not with a gun to his head on the government shutdown and the debt limit. we saw a reversal of position, i

think, over the weekend by speaker boehner when he said at the beginning of the weekend he would not let the government default. and then on sunday he was kind of threatening -- >> do you think he realized he lost all negotiating position by saying i want default and then he realized, i'm now out of ammo? >> you know, i have no idea. i think it's a combination of ideology and his being pushed by the far right combined by a little bit of a sense they don't have a negotiating position. they're not sure what they want. they painted themselves in the corner, not sure how to get out of it. seems to me there are sort of two possibilities now. one is that you can push this off for 60 days or, you know, six weeks and try to create a negotiating process under which they extend the debt limit for some period of time or suspend the debt limit. and they put the government back to work and then try to negotiate a budget framework.

but i don't think obama care can be on the table in that context. the alternative to that is we're going to go right up to october 17th, the markets go crazy. and i think at that point it's anybody's guess but i think -- >> my worry is the markets don't go crazy because they think we're going to get there. you think we're misreading what boehner said over the weekend? >> no, i don't think that he -- saying that we wouldn't put the country in default is saying the same thing as we don't want to shut down the government. that's a standard talking point that both will say. >> these weren't comments. he was making private conversations, privately assuring republicans who were worried about -- >> i understand. but it's just the same point. they're not -- no one's going to give up the negotiating position. and i think that was totally taken out of context. there's going to be -- umt matly the ultimately there has to be a deal -- >> you think boehner's comment that he was -- that he said we're not going to negotiate on

that. that's what he said. play the clip again. you don't think he was talking about the debt ceiling? >> no, what i said was when everyone jumped all over it and he said, oh, we're not going to let the nation go into default. that didn't mean he was just going to say, okay, well, i'm going to pass a clean debt ceiling hike. that's a standard talking point. we don't want the country to go into default. you can't say, okay, i'll give you that and move on. it was always going to be a negotiation around both issues. >> the problem, of course is that boehner's original position was he wasn't going to shut the government down. they can get themselves to a point where they actually threaten default or put the country in default and that'll have global implications and, you know, it will, i think, really depress growth, not just in the united states but across the globe for a fairly long time. i think we really need to move forward with some ability to move past that october 17th

deadline. and then try to negotiate the budget. >> assuming that everybody's playing chicken and assuming that the republicans don't come to play and there is a hostage situation, is there something for the president to give? >> well, i think he's prepared to kind of negotiate with them. what he wants, i think, is relief from the sequester. i think he wants realistic levels of spending on the discretionary side. and i think he's been -- he showed that in his budget earlier this spring. i think he's willing to negotiate over that. i think when you get to obama care, i think there's precious little to give. maybe they can talk about this medical device tax or something small, but i don't think he's got a lot -- >> there's a deal there. i just heard it. i just heard it and you would make it. and, of course, we know you're

with clinton, but there's a deal there. i just heard it. >> well, i'd like to see a three-year deal to get out of this for the remainder of the obama presidency and maybe the republicans can say well, when ted cruz gets elected president, we'll repeal obama care. at least get a framework in place for three years to stop this nuttiness. >> let's do that. do the sequester and do a little bit with the entitlements and everybody's happy. that's possible. maybe that's what it finally looks like. i think you could put it together. >> john, why do you think that the republicans would accept that? that's what the president offered in the fiscal cliff negotiations. he saw this coming down the road. >> because now they're backed into a corner, right? >> they should have looked down the map then. my reading is they want trench warfare. from their view, that's the best hand they have. they didn't want to go to guns. they just want to keep us in this morass on the budget. >> i don't think that's where boehner wanted to go.

i think that's where he got to, alan, i think you're right about that. seems to me we were headed toward some kind of resolution along the lines i was talking about some time this summer. and did this detour off into obama care. you know, new york times reported that was a long planned things by the koch brothers and ted cruz took the bait, boehner took the bait and there we are. >> getting back to the debt ceiling. you're right about the economic concerns it would raise. what i didn't realize is if treasuries, the yield increases by one percentage point, you are looking at the cost of borrowing by increasing by about $120 billion a year for what we already have. i didn't realize that was in there too. logically, you sit down and look at these numbers, do you think there's any way to push past october 17th? both sides have to know what's at risk. >> the combination of ideology

and incompetence, i think risks that now. think about what would happen in advance of that if the european regulators asked to stress test against their exposure to u.s. default. and begin to raise the capital requirements in the european banks. it would be disasterorous. >> we seem to be as unable to control our politics as they were. >> wow. >> treasuries would rally. >> would rally. >> would rally in the event we go off the debt ceiling. >> and get pushed down? >> the risky parts of the capital structure will sell off. stock market will sell off, but the treasury market will rally. >> i'll take the other side of that bet. >> part of the curve will steepen. long-term securities will underperform. but the belly of the curve will rally. it's what it did in '94, '95,

what it did in '11. >> europe was much weaker then. no, i -- i think if the markets think that we may default on our obligations, you'll see a credit freeze. >> it's not going to happen. >> it's not going to happen? >> this is almost -- >> seems like it should happen. >> it should happen for a real reason. >> it shouldn't happen for this reason. if you look, maybe europe is getting better. we're still the cream of the crop. the ability to pay back anything we lend. >> we're so close to just owning -- >> people in the rest of the world, they look at their own, you know, governments and it's like -- they've got 12 different coalitions banding together, they look over -- i think it's surprising things run so smoothly most of the time. i think the rest of the world will look at this and realize we're not perfect but we're

still the best there is. best -- >> and the broader point is the fiscal accounts have approved so much and we're not in a sovereign global crisis. the chinese are not going to let it rise sharply, japanese are not going to let the yen rise sharply. all sorts of buyers. >> we have a deal, meaning the two of us. and i'll get you a button rise above, but i think you could see. the president is the president. boehner, he's not the president. the president can afford to give up -- to look magnanimous here and say for the good of everyone, i'm going to, all right, fine, you guys. you know, you're spoiled little brats, i'm going to come in here and do what presidents do and negotiate. you know, and stuck in a corner and just holding out to the end. you think that's a way to go. >> i think he can negotiate, but

i think he can't do -- there are two things that are kind of off the table. one is he's not going to give up obama care. >> fine. i'll give you that. >> that's his signature thing. >> you got that. >> and the other thing, i think -- >> in the long-term -- >> this stuff about worrying about future presidents having -- that's crap. >> i think that's real, joe. >> come on. >> what he's got to do is get to a place where he can negotiate legitimately over the budget. >> it's nice he's worried about what chris christie's going to have to face, john. >> chris christie or jeb bush? >> i don't know. >> seriously, joe, when you sit in the oval office, you worry about these structural changes in the power of the presidency and what it means for the country and how we're going to be able to govern going forward. we have a more polarized country, not just a more polarized congress.

i think he's serious about saying you've got to have a structure -- >> well, i think he'd like to leave office under 6% unemployment and none of this is helping us get there. >> i get that. >> i think we have more polarized districts. but that's another topic. thank you, guys, you're sticking around for the rest of the show. call bill and have him make the call. >> someone's got to make the call. >> the president is rising above. he's looking at the future of the country. >> doesn't feel like we're rising above, feels like we're stuck in the morass, in the mud. >> speaker boehner went to plan "b" and that put us here. >> you can have the entire country agree it's the republicans' fault if you want, but that doesn't get us where we're going unless, you know, someone rises above. >> i think the republicans have to work out their own internal debate. find out what it is they're

asking. >> democrats usually love diversity. nice diversity in the republican party. >> i think diversity is fine. and as long as -- >> i read someone said that. who said that? carl rove made that comment. >> oh, he did? >> oh, my talking points, yeah. here it is. thanks. >> you made that comment. in my head i was saying, oh, he read the carl rove talking points. >> i knew i had them here. when we come back, the government shutdown heads into its second week with no end in sight and the global markets are taking notice. the nikkei dropping by more than a percent overnight. the dow futures have been down by about 120 points. you can see right now down by about 111. off the worst levels but still triple digit losses at this point. "squawk box" will be back with more of the story after this quick break. [ man ] on december 17, 1903,

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here are some stocks to watch this morning. >> that i missed. >> when the cat's away. the cat's away. boeing, you can imagine, is lower on news that you've probably seen. japan airlines made its first ever purchase from air bus, purchasing 31 a-350s. total 9.5 billion. other apple news, reports the sec has ended an investigation

into apple's overseas cash and tax practices without taking any action. there's a shock. considering they probably have the best analysis, accountants they can buy. i'm sure they were operating under the laws we haven't changed yet. >> what do they do? like the double irish whiskey turn around backwards flip? what is it called? >> yeah, where they put the subsidiary -- but did you see when the cfo was there, who pays the most taxes of any company in the united states? >> apple. >> exactly. you don't want to kill the goose. iphone 5c has seen discounting. walmart and radioshack the latest to cut prices. you didn't do this? >> i did not. >> any comments? >> yeah, there's very little revenue growth and they've done what they can do to make the numbers work.

>> 20 years of revenue growth. >> but that's the whole market. >> goldman downgraded toll brothers, by the way. >> okay. it's called a double irish with a dutch sandwich. >> former economic council advisers chairman, that's you, by the way, and phil lebeau's going to take a spin in a cadillac hopes to be the next big thing in self-driving cars. "squawk box" returns after this. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has.

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congress failing to rise above partisan politics and negotiate a solution to the shutdown and the debt ceiling. >> why can't we all just get along? >> we'll talk to congressmen from both sides of the aisle. >> plus, several key economic data points this week could be casualties of the shutdown. we're going to tell you what not to expect in the week ahead. and gm super cruise cadillac is one step closer to driving itself. phil lebeau will take it for a spin as the third hour of "squawk box" begins right now.

>> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernan along with our guest host alan krueger, former chairman of the white house economic advisers. and head of u.s. equity portfolio strategy at barclays. the futures have been down about 125, i've seen them down about 115, maybe close to 130. 118 right now. overseas in europe, they're nervous about what's happening here, as well. but kind of wait and see, nothing down more than full percentage point. and there was mixed trading overnight in asia too. the shanghai was up more th than .6%. >> the pentagon ordering more than 300,000 employees back to

work today. another week in developments, the house voted to pay all furloughed employees retroactively once the government reopens. there's still no signs of compromise on a bill to fund and reopen the government. and the debt ceiling deadline does loom. next week, the u.s. runs out of credit to pay its bills. treasury secretary jack lew making the sunday talk show rounds. >> if we cross the line, we're going to a place we've never gone before. it's dangerous. >> the argument from house speaker john boehner on the other side. >> the nation's credit is at risk. because of the administration's refusal to sit down and have a conversation. >> there have been some reports. >> we are not going to pass a clean debt limit increase. i told the president, therest no way we're going to pass when the votes are not in the house to pass a clean debt limit. and the president is risking default by not having a conversation with us. >> but moody's ceo tells cnbc

that the chance of u.s. default extremely unlikely. >> hopefully, it's unlikely that we don't go past october 17th and fail to raise the debt ceiling. even if that does happen, we think the u.s. treasury is still going to pay on its treasury securities, prioritize those payments. >> still, we should note that the dollar's trading at an eight month low. >> people buying all the banks in greece, as well. >> that's true, but we could go to -- i think we should make a trip to europe right now. you see that's $1.35 euro. you like paris, italy, come on. >> that's the opposite. you want to be -- >> it's going up. >> going up. >> a lot lower than we were when you went on vacation last year. >> where was it then? >> 1.40 i thought. >> no, 1.35's my level.

>> 1.40 is the level of the last couple of years. that's a breaking point where the ecb gets a bit nervous. >> i'm going to go down -- go down and stay with clooney and who else? next door neighbor. who is that? clooney and somebody i saw over -- i may go down to cabo, i've been invited, i don't know the man, but nice place. >> we'll work on that invitation. in the meantime, also corporate news. >> i'll look up who else. japan airlines -- >> randy gerber. >> maybe you and dan loeb can go down together. >> is he a friends? >> no, that's the point. you don't remember when george clooney came out against dan loeb? >> oh, yeah, yeah. >> the airbus deal for planes for $ 9 billion replacing 777s. it is, of course, a blow to boeing, which had been the airline's supplier for decades. the shutdown is heading into week two and the debt ceiling deadline is quickly approaching.

here now to talk about the economic repercussions of the gridlock in washington is the former chief economist at omb. and professor of public policy of the kennedy school of government. also larry myer who is former fed governor and co-founder of macro economic advisers. larry, why don't we start with you. we heard from the ceo of moody's who does not think we'll actually go over the debt ceiling. what do you think? >> well, i don't know the answer to that. i'm not a political guru. i would say we assume we're not going to go over the limit. obviously as we get closer and closer, the danger is rising. >> in your model, what happens in week two of a government shutdown? how much has been lost to this point? and if we go up to october 17th, what does that do to the economy? >> well, this is a massive cut in government spending with really huge impacts for the economy. now, i don't want to get into a couple of quarters, but if it lasts a longer period of time,

we could have a worst recession in post war period. and day by day balanced budget amendment which is basically what this is could lead to the unemployment rate getting to 15%. >> larry, what do you think would happen in the financial market? >> that's a tougher question, because the distinction is, can the government prioritize? can it pay the interest on the debt and cut all other spending to meet the requirement they don't borrow. in that case, the impact on the financial markets would be more muted, but the fact there's a huge recession coming would have a big impact nevertheless on equities and risk assets. i think it's different if you defaulted on the debt. it's hard to come up with a number of what the impact is on

the dollar. it would be ugly. >> and i would presume if treasury could prioritize, i've seen no evidence they actually can, but, you know, if you go with moody's presumption they would prioritize, i suspect there'd be legal challenges to that from all the contractors who weren't getting paid? there'd be doubt in the financial markets which would make it not too different from them not prioritizing. >> i agree there are legal issues and there are technology issues. so i think a point of departure would be they cannot do it. >> hey, jeff, let me ask you. the department of defense at this point is bringing back over 300,000 furloughed workers today. the house voted unanimously to go ahead and retroactively pay all of the government employees who aren't getting paid. i just wonder, what's the point of a shutdown? seems like you lose productivity at that point. >> absolutely. the shutdown makes no sense at all. and as larry said, you know, in

one circumstance we cause financial panic and the other circumstance we suck demand out of the economy and go toward a recession. so either way, this is not good news. and what's clear is we need to have both the end of the shutdown and passing an extension of the debt limit and then have a sensible conversation about how to build on the progress we've made and bringing down the deficit in terms of what future steps need to be taken. >> i understand that argument. and that's the president's argument he's put out we will talk after we get through these situations. but i understand the republicans thinking they have no leverage. is there a way for both sides to get a little something out of this? >> well, i don't think that's right. the president put on the table earlier this year a package that included cuts and tax expenditures as well as reductions in spending on medicare and medicaid and said let's talk about how to make further progress beyond the progress we've made in bringing down the deficit.

and at the time, boehner said he had no interest in talking with the president on making further progress. >> this was right after -- this was right after revenue -- taxes had been raised. correct me if i'm l wrong on this, but i think this was right at the beginning of the year after taxes had been raised significantly and the republicans didn't want to come back and say, okay, now in order to get entitlement cuts, we have to agree to raise taxes again. >> we've done a lot of cuts to discretionary spending and couple pieces of legislation. we did -- >> major cuts. getting through the sequester, by not having an agreement that's how you got some of those cuts. >> but earlier -- >> it was part of the budget talk. >> even earlier, there was significant progress made that has been a big part of why the deficit came down. we've had measures on the revenue side and spending side to date. and it's going to take each going forward. and what needs to happen is not any more changes to rates, it's

closing tax expenditures which really in many cases are just another type of government spending that we can cut if we get rid of the tax expenditures. >> i'll admit, it makes your head spin if you try to figure out whose fault it is. last time it was so and so's fault. there's a lot of bad blood on both sides. is there a way you can actually reach some sort of a grand agreement on both sides? if obama care's off the table, that's not going to be a negotiating part, do you get there by saying, yes, we will address entitlements and also take a look at higher revenue. >> sure. if you restructured. there's all this concern about too many cuts to spending. let's restructure the spending cuts. the uk cut spending but 80% entitlements, 20% near term discretionary spending. we've done almost entirely discretionary spending, let's swap some of that. let's do the cpi in exchange for

rolling back sequestration cuts. creates stimulus. i don't believe it's all that stimulative. but nonetheless, new keynesians might, but that's the grounds for an agreement. and that's what has to be done. >> can that be reached in the next week? >> i don't think it can be in the next week. i would say the president kept his offer out there on the sb entitlement reforms. there's so much difference in opinion in terms of what our problems are and how to solve them. and my hope would be that congress just does no harm. they could do very severe harm with the debt ceiling. >> right. so larry myer made a great point earlier which is if you think about financial markets as discounting future economic activity, the reason that the equity market reacts so negatively to these scenarios is

because if there is fiscal drag that results as a consequence, that means the growth sensitive parts of the market should correct. the treasury market's the opposite. so unless you really think we're not going to pay our debt for an extended period of time, treasuries rally, yields go down, but stocks sell off. that's the reaction in '94, '95 and that's the reaction in '11. >> if that's the case, why have rates on short-term gone up for those maturing in october? >> you've got a very small steepening curve. but the belly of the curve have all rallied substantially through this. that's the forward-looking part of the curve. yeah, you've got dislocations within the equity market. short-term volatility moves because if you have to make markets on one-month options, it's a scary proposition through an event like this. but the longer term volatilities haven't moved at all.

>> we were ready for 10% and got that forecast of a 2.1. >> you have discount in the short-term, that's what shows up in short-term index. the longer term securities that discount the economic outcomes of this are not reacting. >> thank you both for joining us today. and alan and barry will be sticking with us. coming up, the government shutdown means no economic data from the labor department or census bureaus. steve liesman will join us next with more on the data casualties. and we'll talk to congressmen from both sides of the aisle about the negotiations or lack thereof. and then google isn't the only company working on a self-driving car. phil lebeau's going to join us from michigan. going to take him for a ride. we're going to come back with a lot more. we asked people, "if you could get paid to do something you really love, what would you do?" ♪

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okay. we've got steve liesman at the desk. we do have red arrows as the government shutdown continues. new questions are on us here. s&p 500 off about 13 points.

and the nasdaq off about 22 1/2 points. today was scheduled to be a light day for economic data. the government shutdown is here. right now, joining us to talk all about this, mr. liesman can help us through, trying to figure out. >> what happens if there was a decline in government activity due to the shutdown but there wasn't any data to prove it? >> if a tree falls -- >> let's take a look, folks, what we get, don't get. and some of the things. because we don't get some stuff we don't pay attention to that we wouldn't normally pay attention to. today we'll get consumer credit. that comes out. tomorrow, we're going to pay a little more attention to the nfib. we're not as you'll see later, getting retail trade from the government. international trade, that does not happen. johnson, redbook weekly and the imf world economic report will come out. let's move on now to wednesday. mortgage market index, that's

the association that provides that data. fomc minutes? yes. >> how can the fomc minutes come out? >> the federal reserve is a -- what's the word they use? no, no, no, it's a nonappropriated entity. is that how they call it? >> that's correct. they're funded by fees. >> nonappropriated -- they're still funded. they do what they want. >> they sent you the notes every time. >> i have sources. >> we had the employment number. you gave us that on friday. >> i did get you the employment number. >> what was it? >> 158. >> plus or minus 50. >> plus or minus. >> my 95% confidence level was zero. you can take that any way you like. let's move on and look at the rest of the week. on thursday, we will get claims. krueger, can you tell us why we get claims. i don't know why we get claims, there was some thing greenspan did in '96. >> i think because it's a mandatory program. >> no import prices and no federal budget report. what does that mean? johnson redbook monthly.

we'll talk about that in a second. that's the best proxy for retail sales. moving on to friday, no retail sales, no home sale price report. consumer sentiment, we'll get, no business inventories report. and then we'll have a lot of fed speakers speaking about the uncertainty, i expect. look at that, on thursday, we get a trifecta, bullard, williams and tarullo. we'll see what they have to say about the shutdown. a lot of talk there. a lot of talk over the weekend from economists saying, you know what, i thought december was the best possible time for tapering and now they're saying that the risk is january 2014 is when they might do it at best. >> can i ask a question, if that's true, what happens to the idea if it's finished up? >> that's an excellent question. do they then extend it? you think about what happens to the slope. >> going very fast. >> it would have to be much sharper decline. >> they said that. they said they were going to be

done by the end of 2015. >> can we look very quickly at the impact of the debt ceiling breach if we get there? government spending in that case, it's a budget amendment. somebody said that, spending cut by 1 of every $3. 32% decline or down $108 billion. i don't know how you do that, but the question becomes, alan, is there a way -- is there -- was a secret plan inside treasury? becky asked this question. >> yeah, is there -- what case of emergency, break the glass. >> double secret plan. >> i would take the single secret. >> there's no plan that is sufficient for the kind of calamity that we would face. >> that is sufficient. but there is a plan, right? >> well, look, it's incumbent on government to make contingency plans. there's no plan that's conceivably possible to cope with breaching the debt ceiling. >> do you have any sense to what this does to the president's plan to pick a new chairman?

>> i'm observing that from the outside. i think that the fights that we're seeing in congress are not helpful for any nominee. it's going to slow down nominations, that's not good for the country, not good for the economy. >> do you think this would be a reason for bernanke to stay on a little longer? >> no, can't get inside the head of ben bernanke. i think he's done a fabulous job. i think he certainly earned the opportunity to leave if he would like to leave. but i know he also cares deeply about our country and about doing what's best for the economy. >> what happens if there's not a nominee who's been confirmed by january when he's supposed to leave? does he traditionally stay? >> he can stay on. >> he would stay on potentially, wow. poor bernanke. >> i gave the president of the united states my advice about his selection for the fed and that's the only person i'm giving my advice to.

i can tell you that all the candidates whose names you've seen in the paper are standing economists. >> we're not asking you to give us advice on it -- >> what did you tell the president? >> this may be my first interview but i did learn a few things over the years. >> you didn't really say you wouldn't tell us, so now you did. >> now it's official. you really won't tell us. >> the line from -- and this is from -- i hear from senators, i hear from different people, not raising the debt limit does not imply default. we'll honor all notes and interest. there's no such thing as a debt limit because it is always raised. so that is why we are at $17 trillion. >> joe, i've read almost every paper you can read on this. >> there are people in high places. >> the only thing i've been able to find is a footnote in a congressional research service report that says there was something of a priority planned that the treasury won't give the congressional -- >> there might be -- >> a double secret plan. here's the problem, all right. the treasury argues it has no

legal authority or legal basis to pay one thing or another. everybody says, oh, well, just pay the interest on the debt. okay. but you think about it, joe, there's no difference in an appropriation law in the priority of -- for a national park, the debt ceiling or the nuclear missile. there's no -- they're all equal law. so i think what happens here, and maybe alan has an idea on this. if we reach the debt ceiling, jack lew will have to break some law. there's a prioritization of constitutionality and he'll have to make certain choices. and it's not strictly true. but he may have to choose to pay the interest on the debt or to pay retirees social security. i mean, it's -- you know. >> right. >> he could have to close the justice department, the fbi and the courts. >> you have to get to november 1st or 2nd? >> yeah, the timing has to do with when certain payments are due. or they can go day-to-day and

make no choices. meaning debt payments could come late if he just pays what bills are due when it's due. >> the computer system as i understand it is not rigged to do that. ♪

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of the weekend box office. the movie that stars sandra bullock and george clooney took in $55.5 million in northern american ticket sales. last week's number one was sony's "cloudy with a chance of meatballs 2." that was number two at $20.5 million. when we come back, the government shutdown continues with no hint of compromise in washington ahead of that october 17th debt ceiling deadline. up next, we'll talk to congressmen from both sides of the aisle about the sticking points that are preventing a resolution to the problem. i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u.s. when i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪

welcome back to "squawk box." let's take a look at some stocks to watch in today's trading. alcoa has been cut to equal weight from overweight. also, take a look at blackberry, its shares are on the rise according to reiters, blackberry is now in talks to sell parts of itself to google, s.a.p. and cisco. that would be an alternative to the buyout of the whole company by fairfax financial. also, cooper tire shares, they're taking a hit. this company already struck a buyout agreement with apollo tires. now apollo says it's been hit

with unexpected costs related to the merger and it believes a price reduction is appropriate. as they try to recut that deal. we'll see what happens to that stock. still no end in sight due to the government shutdown and the debt ceiling. a deadline is creeping closer and closer. can congress find a resolution to rise above the partisan bickering? joining us now to talk about this, congressman adam schiff, democrat from california. start with you, congressman barton. just because i think we got -- maybe you can tell us whether obama care now, can we put that aside and do some budget deal? would that be enough to maybe not a clean cr, but something where boehner and even, you know, some of the over guys would be satisfied. is obama care off the table now?

>> i don't think obama care is off the table. it's the largest entitlement expansion. we do have the debt ceiling that according to the president is coming up in mid october. republicans in the house can multitask, i would assume the democrats can too. we can handle them simultaneously or handle them independently. >> are you saying you would actually take us over the debt ceiling and say forget it if obama care isn't on the negotiation block? >> i'm not saying that at all. but what i am saying is this debate over the affordable care act is not just another debate. it's a fundamental change in the way americans receive their medical care. >> we can't get anywhere with it. >> well, maybe you and i ought to have a cup of coffee and see if we can work it out. >> do you want to say right now one way or the other whether you're willing to let it go. >> no, no, the debt ceiling in my mind is a bigger issue than

obama care. i want a real debt ceiling with real reforms and entitlement and a way to get the budget balance in the next five years. >> you're willing to play with that? >> i'm not sure what you mean by willing to play with it. >> what i'm suggesting is that come september 17th, you're prepared to go over if you don't get what you want on entitlements some of these other issues? >> i don't know what go over means. i'm not going to vote for a -- a so-called clean debt ceiling where we give the president a blank check. i will not vote for that. >> well, that's -- assuming that the president's not going to debate on this, you've got a problem, right? >> i think the president made it clear he's not going to be extorted on this type of thing and it'll pass probably without the congressman's vote. >> it won't pass. >> i wanted to ask the congressman how his staff have been weathering the shutdown. have they been furloughed? how have they put up with not

getting paid? >> my personal staff. >> your personal staff, other staff in congress, federal workers. >> well, each congressman is an independent agent. so each of them decide which stay and which are furloughed. in my case, i have one person in each of my offices in texas and the rest are at home and up here i think i have three people plus two interns that are voluntary anyway. >> and those not getting paid, how are they handling the situation? >> well, they seem to be in good spirits. they can't do work from home. and they don't have their blackberries or their computers but they can call in and check on various issues that they're tracking. and i think they understand this is a serious situation and for the short-term some sacrifices have to be made. >> congressman, at this point, i guess we all are thinking about that comment that -- i don't know, it was an anonymous source that said we don't care how long

this takes, we're winning. that's not the right attitude for democrats or even the president, right? >> that's a stupid attitude. that is not defensible at all. we're all losers in this government shutdown, the american people, the economy, it's been an unmitigated and manmade disaster. and if we go over the next cliff and allow default on our debt obligations, it'll be an even bigger disaster. there's no winners here. but i do disagree with the president if he's going to negotiate either the kind of my way or we shut it down, burn the house down this time over the debt ceiling or over the shutdown we're incurring right now, he's going to invite this kind of extortion every time there's a deadline. the affordable care act was upheld by the supreme court. we had an election, presidential election over it. the other side lost. it's time to let it go.

give it a chance to succeed, give it a chance to be improved. it's more than fair to ask the president to negotiate improvements but not with the threat of shutting down the government or defaulting on our debt. it's no way to do business and can't be allowed to proceed that way. not only for this president but future presidents. >> well, then, you're not willing. so we're where we are. you saw boehner, saw what was said. so you say the president shouldn't do anything at this point. >> well, i think, look, there's a way forward here and the republicans seem to be in search of a prize of some kind. they've moved -- some, others have moved away from obama care to more budgetary decisions, i think there's a face-saving way out of this. >> is there anyone other than the president that could -- that could make the move to get this done? and presidents in the past, i mean, president -- that's what they do. >> i'll make a deal with the president and the democrats. let's make obama care voluntary for a year. if it's as good as the democrats

say it is, the american people will accept it and if it's as bad as the republicans like me say it is, they'll reject it and we can come back in a year -- >> of course -- >> what needs to be fixed. make it voluntary and let the people choose. >> that doesn't work at all because if you -- >> why doesn't it work? >> well, i'll tell you why it doesn't work. it doesn't work because if you let people choose to have insurance or not but you require the insurance companies cover those with preexisting conditions, then people will only opt into insurance when they get sick and, of course, that won't work at all. the whole point is -- >> all i know all my friends on the democratic side have been saying how great it is. >> congressman -- >> which congressman? >> the one from texas. the question i have for you is this. becky said in the last hour, we're talking about if you go over the debt ceiling what the cost is, and the cost could be $120 billion annually. >> that's if the interest rate goes up, although barry said in the past times -- >> are you willing to risk that? and it sounds like you might be?

>> well, we have in my household budget some bills that have to be paid and some bills that only paid partially. i think paying interest on the debt has to be paid i think paying social security payments have to be paid. i don't think paying the secretary of energy's travel expanses have to be paid 100 cents on the dollar. we've got more than enough cash flow, more than enough cash flow to pay interest on the public debt when it comes due and the house republicans have passed a prioritization bill. this talk about default by the u.s. treasury is nonsense. the president can be smart or the president can be stupid. and i would assume as smart as president obama is when push comes to shove, he'll be smart. so we are not going to default on the public debt. but that doesn't mean that we have to pay every bill the day it comes in -- >> you think jack lew is lying

when he says he can't prioritize? >> i'm not going to say anybody is lying. i'm saying he's playing politics when he says that. >> congressman, just to come back to affordable care for a minute. i get the negative selection bias point you're trying to make. what if you took the penalty for the individual mandate and said nobody making less than $100,000 has to pay it for the first year in exchange for a restructuring sequestration cuts. in essence, you've created a pseudo fiscal stimulus plan where you're not cutting spending in exchange for just the low end person doesn't have to pay that fine for a year to match up with the employer mandate. do you think that's a nonstarter, as well? >> i think it's a nonstarter because many will tell you the penalties are too low as they are. people make an economic decision, they're better off just paying the penalty and then if they get ill, they can opt in.

i think economists would reject that argument and say it makes the program even less workable. but the point i'd like to make is the president has said all along and i think democrats in congress feel the same way, this is not going to be a perfect process, not a perfect reform. it's going to need improvements and tweaks as we go along and we're more than willing to entertain those. there ought to be some way to resolve this by saying, let's establish a process. we're not about to guarantee the other side they're going to win those votes because, frankly, they haven't been winning them and you can't simply use the lever of a shutdown or the lever of a default and, frankly i think it's irresponsible to take us over that cliff and say, well, we'll see how it works out on the other side. yeah, we'll sit down at the table and negotiate a process where we can get votes on these things and then the congress will do its will. that may be one way out of this impasse. but to take the gamble to roll

the dice and say, well, the secretary can prioritize when he says he can't or that the international markets are going to view this as anything other than the most severe dysfunction and depreciate u.s. debt, i think, is a terrible risk to take. >> all right, gentlemen. we got somewhere, i think, sort of. we appreciate it. thanks for your time today. >> thank you. >> when we come back, gm getting one step closer to a self-driving car. phil lebeau's going to bring us the story from michigan right after this quick break. she loves a lot of the same things you do. it's what you love about her. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity.

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welcome back to "squawk box" this morning. gm taking the next step to a self-driving car. phil lebeau joins us now from michigan with more. good morning to you, phil. you are in the car and it is -- you're going to drive it without driving it? >> i am, andrew, behind the wheel, behind the wheel. i'm going to show you in a little bit how gm's new supercruise control works out on the test track. let me give you a peek about what this is all about. this is a technology that general motors is putting into vehicles that will be fully implemented, they believe, before the end of this decade. the idea here is it controls braking, steering, lane assistance under certain conditions. and as time goes on, they expect it to become more complex and more oriented to assisting the driver. are we close to seeing the day of people getting in the

backseat and not having a driver? no, we're a long ways from that happening. >> the driver's still going to need to pay attention. the level of technology isn't going to all of a sudden just take a quantum leap overnight where you can simply sit in the backseat of the car and let it take you to work. that might happen some day. what we're doing now is building on technologies that we have available and taking them to the next level. >> as you take a look at shares of general motors, keep in mind gm is not alone in this race for semiautonomous vehicles. here's how it works with super cruise control. once i'm in the lane, the right spot, the screen will tell me -- i'll get green and then i leave go, there you go, guys. the car is controlling itself. i'm not doing anything here. >> how fast? >> staying in the lain, staying at speed. >> how fast are -- >> not using your knees? let me see your knees.

>> you want to see my knees? >> phil, how fast are you going? >> 52. we're going to get it back up here. we were testing a few minutes ago at 60. we'll do that. >> what would be your worry. you take your hands off and i know you're supposed to pay attention. but because you don't have to keep your hands on it and your child is sitting in the back and you probably think yourself i can probably look away for a minute. does it alert you, or do something or you have to be there? >> it will alert you. in fact, we've had the car alert us a couple of times that we need to pick up our speed or that we were departing from the lane. this is a case where i've decided i want to speed up, get back up here to 55 or 60. your question gets to the point of how much control will you have with autonomous drive vehicles? they still want you to have your hands on the wheels. they do not want you having a conversation with someone in the

seat next to you. you should be paying attention. >> if your hands don't have to be on the wheel -- >> if you take your hands off the wheel -- >> oh, i hope we didn't lose phil. >> that's because he's driving. he's breaking up because he's driving. >> you only have to hope that the computers inside don't have the same glitches we just did on the air. >> but, look, i think that's -- phil's point is the right one. you can't turn around and talk. >> but my anxiety is -- if the indication is you don't have to hold on to the wheel, by default, your brain thinks that it could be available to start doing other things and that's when things get a little, you know, you know me being anxious. >> yeah. i don't use cruise control. >> you don't really drive. >> no, you already have a driver. you have a driver but you don't drive your car. you're in a better position. >> for a guy that drives from new york city into new jersey every day, you know you keep your hands on the wheel otherwise 18 wheelers are hitting you. >> yeah, that is true. >> but you have issues now.

>> jeeves didn't show today. >> how did you get here? >> taxi. >> taxi has some personal problems. >> wow. >> yeah. >> all right. so you're on the market for -- >> i think jeeves -- i don't know, jeeves might be unavailable. all right. >> all right. when we come back, you can start off your week right. jim cramer will join us right after this with the stocks to watch ahead of the opening bell. tomorrow on "squawk box," guest host sam zell. >> nobody wants to make commitments beyond tomorrow. >> the outspoken investor will weigh in on the government shutdown. the debt ceiling deadline and a lot more. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern.

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welcome back to "squawk box." the future is down by triple digits. dow down by 105 below fair value. day seven of the government shutdown. let's get to the new york stock exchange. jim cramer joins us. i am not going to ask you to figure out what's happening with the debt ceiling, washington and, debt shutdown. i figure all of us are going to put this on hold. let's look at stocks. boeing has been under pressure

after japan airlines has said it is going to be buying planes for the very first time from airbus. how big of a problem is this? >> boeing is hard to get a plane from. the cue is so long. i don't know if it is in the numbers. i don't think it is in the numbers that they would lose japan air. it was a big deal in the sense that this is a company. boeing has had 60 years worth of ties to the japanese. i am surprised about it. i would like to think that there is -- that if the numbers aren't coming down, boeing is an actual buy into this area i think that is going to be the case ibm was actually downgraded. >> i'm very worried about ibm's quarter. i haven't heard anything good about ibm. most importantly is the down grade is structural. they are saying this company is going to be hurt by the cloud. the other companies that have been hurt, it has been meaningful. this is a company that may be on the wrong side of the trade for some large transformation we all

see. >> jim, this is barry knapp. they just downgraded emc a couple of weeks ago. this is what's so hard about investing in tech. you can have a view of the group but the trends evolve so much. things move away from the cloud. >> how crazy is it that vm is actually a cloud play and emc opens the biggest stake in vm. you would be tempted to go long vm and short emc. it is complicated, because the cloud is taking so much mine share everywhere. >> jim, i'm feeling the rise above. i have the idea of how to turn this. i'm serious, from a negative into a positive. i'm serious. we get these guys. the president called. we deal with the sequester. discretionary is not the issue. we give some stuff on the sequester. we do a little bit on

entitlements, get the dialogue started on cost of living. we come together and do these things. the market likes it. we get together a little bit better. obama care isn't part of the equation. it is sequester and entitlement. we come up with something. >> that will be fabulous. entitlements are the issue. >> i don't know whether the republicans would agree. >> i don't know that they would. >> they might but he would look -- if he did it, it wouldn't be a sign of weakness if you were to call and say, all right, let's go ahead and talk about this. >> how about saying, listen, i'm not negotiating over the next year but i am in the back here. kind of like what greenspan did with social security. in the back years, i'm perfectly willing to negotiate. over the next year, i'm not. >> let's get the dialogue started. we can't go any further apart. >> joe, i think you are dead right. i want that pin and i twar proudly. >> i will now too, because i got

the solutions. >> when you heard from joe barton -- >> you could call him and he is not the guy. >> a lot of those guys. >> you had an interview that made me think they already have a plan for when we default, which is that we selectively play. this is very different. >> we had other interviews earlier where you could see the deal. >> the deal was, we could have a role and get that deal. >> there is a deal to be done. there has to be. >> i agree. >> jim, real quick. you got name checked today in that david carr column. what do you think about the fact that carl icahn, each of his tweets is worth about $5 billion. >> i don't know. i like the whole idea that he has been sending out these tweets, each worth about $6 billion of market moves. maybe that's the power of twitter. >> let's not forget that the

judge's show was mentioned, jud judge wapner. twitters going to come north of billions. we know what happens when something is in excess of what a lot of people think it should be coming up, our guest hosts have been alan kruger and barry knapp. our only republican. he has had a hard day but he has held his own.

let's get back to our guest host. alan kruger and barry knapp. what's the last word? >> i would love to see a grand bargain. i think to get there, the republicans need to get away from ideas like repealing the affordable care act and prioritization and start to kofrn. they need to solve their internal problems. dissension is fine. having disagreement and a range of views is fine. they need to have a leader who is strong and can reach a bargain. >> you want to take the other side of that? >> no. i would just add that the fiscal accounts are in a much better position. the markets are not going to overreact to this. they have become accustom to thinking there is a deal out

there. they deal will not have a huge amount of fiscal drag. the markets are right not to overreact to this. >> thank you guys for being here this week. >> the first time you have been on tv. >> i was happy to join you early this morning. >> that does it for us today. make sure you join us tomorrow. right now, time for "squawk on the street." good morning. welcome to "squawk box" or actually "squawk on the street." i'm david faber with jim cramer live from the new york stock exchange. this week begins with jiters over the continuing government shutdowned athe march toward the debt ceiling deadline. let's take a look at the futures. you can see we are geared for what is going to be a fairly significant lower open. as for the ten-year yield, which can be very important, as we know, still coming in a